Morning briefing: Euro can tank lower to 1.1300 if it does not hold above support at 1.1400

Vikram Murarka Kshitij Consultancy Services

The Dollar index continues to rise and could move up to 101-101.50 while Euro can tank lower to 1.13 if it does not hold above support at 1.14. EURINR needs to hold above 108 else it can fall to 107.50-107. EURJPY may hold within 183-186 region for now. USDJPY is holding well above 161 and can rise towards 162 soon. USDCNY can test 6.78 before coming off towards 6.76/75 again. Aussie looks bearish to 0.69 while Pound has already plunged to levels below 1.3250 and needs to bounce back to avoid further decline. USDINR may move higher on Dollar strength and Euro weakness. There is crucial support at 94.15 and lower near 94.05 which may hold.

The US Treasury Yields have risen back from their support. A strong follow-through rise from here can take them further higher. The German yields have bounced back well ahead of their support. While this sustains, they can rise more. The 10Yr GoI remains lower and stable. It has room to fall more from here before reversing higher again.

Global equities are showing mixed trends. Dow and DAX remain capped below key resistance zones and are vulnerable to a pullback towards 51000-50000 and 24500-24000 respectively. Nifty needs to sustain above 24000 to resume its upmove towards 24400, failing which it may slip towards 23800-23600. Nikkei remains the strongest among the major indices and could extend gains towards 73500-74000 if it breaks decisively above 73000. Shanghai remains weak in the near term, but while above 4000, the broader outlook stays positive for a rise towards 4150-4200.

Crude prices remain under pressure. Brent trades below $85 and WTI below $80, keeping the bearish outlook intact for a decline towards $75-$70 and $70-$65 respectively. Gold continues to look vulnerable to a fall towards $4100-$4000 before a meaningful reversal is seen. Silver can extend its decline towards $60. Copper is approaching key support near $6.25, which needs to hold to preserve the possibility of a recovery towards $6.50. Natural Gas remains range-bound and is likely to trade within the broader $3.00-$3.50 range for some time.

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Author

Vikram Murarka

Kshitij Consultancy Services

Vikram has been forecasting, trading and hedging currencies since 1991. Beginning his career as a currency trader in Essar Group, he was managing an FX exposure of $1.2 bln.

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